President Bush says a dose of IT can help the ailing health-care industry save billions of dollars, but government's role in the transformation is unclear.

America spends nearly $1.7 trillion annually on health care, and we use the most advanced medical diagnostic tools in the world.

Yet the health-care industry continues to rely on paper files, not computers, to manage health records -- a practice that saps efficiency and boosts expenses.

Rising health-care costs are becoming an urgent problem. In February, the Bush administration predicted government would account for half the nation's health-care spending by 2014. Total spending will nearly double to $3.6 trillion by then, and health-care costs will constitute 18.7 percent of the gross domestic product, up from 15.3 percent in 2003.

To curb the trend, the Bush administration is pushing several initiatives aimed at automating the health-care industry. The administration aims to cut annual health-care spending by 10 percent, while improving overall care and making patients' records more secure. To make that happen, the Department of Health and Human Services (HHS) is relying heavily on the private sector to jump-start technology adoption.

But the administration has its work cut out. Several problems hold the industry back, including lack of interoperability and a level playing field among providers, and funding issues.

The Adoption Gap and Other Holes
Despite its size, health care remains highly fragmented. The typical doctor works in a practice with 10 physicians or fewer, and more than 35 percent of this country's practices have three doctors or fewer. This fragmentation is a huge impediment to automation efforts in the industry. Only 15 percent of all primary care physicians have electronic health records (EHRs), barely 6 percent of solo practices use the technology, according to Medical Economics, and only 13 percent of hospitals use them, according to the federal government.

It's not that doctors don't want EHRs -- about 23 percent of physicians plan to acquire EHRs in 2005, according to a Medical Economics survey -- but at $30,000 per physician, the systems aren't cheap.

As a result, physicians, clinics and hospitals still rely largely on paper. Vast sums are spent on data entry and manual workflow systems, while money is wasted on duplicate tests that could be avoided if doctors had access to patients' integrated medical histories. Worse still, fragmented paper records contribute to medical errors, which cause an estimated 45,000 to 98,000 deaths each year.

Adding to the problem, vendors aren't willing to give up their proprietary lock on customers to throw the door open to the larger, yet more fragmented health-care market. A series of initiatives launched in 2004 by the Bush administration is meant to encourage rapid adoption of EHRs and a new nationwide health information network.

"America needs to move much faster to adopt information technology in our health-care system," said former Health and Human Services Secretary Tommy Thompson. "Electronics will provide a quantum leap in patient power, doctor power and effective health care. We can't wait any longer."

Thompson called on the private sector to certify health-care IT products, as well as plan and develop a new nationwide network for health information. At the same time, the president told the federal government's various health-care programs -- including Medicare, Medicaid, Veterans Affairs and the Department of Defense (DoD) -- to report on how they plan to adopt health-care IT.

David J. Brailer is the government's national coordinator for health IT and the administration's point man for transforming health-care automation.

Appointed in April 2004, Brailer has his hands full trying to goad a huge, cumbersome industry into the Information Age. Though progress has been made, the pace is clearly not fast enough for Brailer. Earlier this year, The New York Times reported that Brailer warned the health-care industry to quickly adopt standards for exchanging EHRs among doctors, hospitals and insurers, or face a government mandate to do so.

So far, three IT trade associations have responded and formed the Commission of Health Information Technology to set standards for health-care IT tools, such as EHRs. In January, eight vendors -- IBM, Microsoft, Oracle, HP, Cisco, Accenture, Intel and Computer Sciences -- agreed to pursue open technology standards for building a national health information network, and formed the Interoperability Consortium to speed standards development for the network.

But automating such a large industry so quickly is a daunting challenge. In a speech before the Healthcare Information and Management Systems Society in Dallas in February, Brailer talked about progress but focused on hurdles.

"First is an adoption gap. My concern is not low EHR adoption, but variable EHR adoption," he said. Citing the growing disparity between the few large group practices with EHRs and the many solo practices without them, Brailer pointed to the lack of a level playing field that would allow all practices to adopt EHRs and benefit from automation.

He also cited the growing amount of proprietary data in the health-care world at a time when both the private and public sector are pushing for interoperability.

"If interoperability is not solidified and built into EHRs, a generation of investment will be lost, as will an opportunity for fundamental improvement in care delivery," he warned.

The third problem, according to Brailer, is privacy and information control. He emphasized the benefits of IT over paper as a means for information security, but acknowledged that when it comes to privacy, most people don't understand how IT can be preferable to paper.

"We need to be disciplined about developing the business rules, policies and protections that get consumer health information where they want it -- immediately -- and keep it from going where they don't -- ever."

Legal problems also loom.

Writing for Health Data Management, Joseph Goedert echoed concerns voiced by many that existing laws could impede progress in information sharing. "Providers believe anti-kickback provisions in federal laws -- particularly in a law known as Stark II that restricts physician referral practices -- prevent large provider organizations from helping affiliated smaller ones to automate," he wrote.

Others, including Brailer, have expressed concern about state laws that prohibit certain types of information sharing.

Footing the Bill
Finally there's the political situation with moving health-care IT to the front burner. In a lengthy examination of the issue, Goedert urged the health-care IT industry to give Brailer better support and step up its lobbying efforts. Goedert observed, in the February issue of Health Data Management, that Congress has introduced various pieces of legislation to kick-start the adoption of data standards for interoperability as well as authorizing funds ranging from $100 million to $2.5 billion spread over many years, but noted that authorizing funds isn't the same as getting them appropriated.

Brailer hopes to channel the $4 billion the federal government spends annually on health-care IT through the VA, DoD and other agencies to stimulate the market for interoperable health-care IT. He said nearly two dozen federal agencies are working together to align health-care IT across government.

And some federal money is being freed up to stimulate health-care IT projects directly.

President Bush proposed $100 million in fiscal 2005 to cover project grants through the Agency for Healthcare Research and Quality, and projects attached to Brailer's office. In November 2004, however, Congress deleted the $50 million meant for Brailer's office. The administration asked Congress to restore the $50 million.

Though at press time the issue was still unresolved, many saw the cutback as a sign that the administration wasn't pushing hard enough to support health-care IT. Newt Gingrich, former speaker of the House and founder of the Center for Health Transformation, told The New York Times
far, three IT trade associations have responded and formed the Commission of Health Information Technology to set standards for health-care IT tools, such as EHRs. In January, eight vendors -- IBM, Microsoft, Oracle, HP, Cisco, Accenture, Intel and Computer Sciences -- agreed to pursue open technology standards for building a national health information network, and formed the Interoperability Consortium to speed standards development for the network.

But automating such a large industry so quickly is a daunting challenge. In a speech before the Healthcare Information and Management Systems Society in Dallas in February, Brailer talked about progress but focused on hurdles.

"First is an adoption gap. My concern is not low EHR adoption, but variable EHR adoption," he said. Citing the growing disparity between the few large group practices with EHRs and the many solo practices without them, Brailer pointed to the lack of a level playing field that would allow all practices to adopt EHRs and benefit from automation.

He also cited the growing amount of proprietary data in the health-care world at a time when both the private and public sector are pushing for interoperability.

"If interoperability is not solidified and built into EHRs, a generation of investment will be lost, as will an opportunity for fundamental improvement in care delivery," he warned.

The third problem, according to Brailer, is privacy and information control. He emphasized the benefits of IT over paper as a means for information security, but acknowledged that when it comes to privacy, most people don't understand how IT can be preferable to paper.

"We need to be disciplined about developing the business rules, policies and protections that get consumer health information where they want it -- immediately -- and keep it from going where they don't -- ever."

Legal problems also loom.

Writing for Health Data Management, Joseph Goedert echoed concerns voiced by many that existing laws could impede progress in information sharing. "Providers believe anti-kickback provisions in federal laws -- particularly in a law known as Stark II that restricts physician referral practices -- prevent large provider organizations from helping affiliated smaller ones to automate," he wrote.

Others, including Brailer, have expressed concern about state laws that prohibit certain types of information sharing.

Footing the Bill
Finally there's the political situation with moving health-care IT to the front burner. In a lengthy examination of the issue, Goedert urged the health-care IT industry to give Brailer better support and step up its lobbying efforts. Goedert observed, in the February issue of Health Data Management, that Congress has introduced various pieces of legislation to kick-start the adoption of data standards for interoperability as well as authorizing funds ranging from $100 million to $2.5 billion spread over many years, but noted that authorizing funds isn't the same as getting them appropriated.

Brailer hopes to channel the $4 billion the federal government spends annually on health-care IT through the VA, DoD and other agencies to stimulate the market for interoperable health-care IT. He said nearly two dozen federal agencies are working together to align health-care IT across government.

And some federal money is being freed up to stimulate health-care IT projects directly.

President Bush proposed $100 million in fiscal 2005 to cover project grants through the Agency for Healthcare Research and Quality, and projects attached to Brailer's office. In November 2004, however, Congress deleted the $50 million meant for Brailer's office. The administration asked Congress to restore the $50 million.

Though at press time the issue was still unresolved, many saw the cutback as a sign that the administration wasn't pushing hard enough to support health-care IT. Newt Gingrich, former speaker of the House and founder of the Center for Health Transformation, told The New York Times the loss of financing support was "a disgrace" given the administration's previous statements.

And some have questioned the overall size of the administration's request given the industry's size. The Lewin Group estimates the cost of implementing EHRs nationwide to be $27 billion to $50 billion.

The administration has requested $125 million for fiscal 2006.

In October 2004, the HHS also announced $139 million in grants and contracts to promote health-care IT. Some of the money is going to small and rural communities, hospitals, providers and health-care systems to help them develop and use IT in health care.

Increasing Urgency
Whether the Bush administration's push for standardized EHRs and a national health information network is derailed by the current setbacks remains to be seen.

In November 2004, Brailer's office issued an RFI asking whether and how a national network could be developed. Some advocate a large central data repository for EHRs. Others push for data storage at multiple regional sites. Still others see a distributed storage solution -- where the generating party maintains each piece of the patient record -- as the best approach. Everyone agrees the federal government should not impose a one-size-fits-all solution to the network.

Whatever the solution, the need for change is clear, said Brailer. "Health-care costs continue to rise, our population continues to age and the epidemic of medical errors is unabated," was his bleak assessment of the situation.

But he added hope: "Health IT has shown a challenged but resilient industry that there is hope for change, and that hope doesn't have to come from the top down but from the inside out. Health IT is not just about better treatments for the ailing and ill among us, nor just for all of us who want to prevent or limit illness in its early stages. It is ultimately about treating the industry itself so that we can have not only the best science, infrastructure and professionals in the world, but also the best value, safety and productivity."